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Pittsburgh City Council Gets Serious about Affordable Rental Housing

Spencer Wells
May 5, 2017
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By Ainulindale (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

May 3, 2017; WESA-FM (Pittsburgh’s NPR)

Like a lot of Rust Belt cities, Pittsburgh is undergoing a rental renaissance that’s putting pressure on affordable housing. At the same time, many low-income homeowners need assistance to maintain their houses. In an effort to tip the housing market back toward affordability, the Pittsburgh City Council is pushing ahead with a plan to create a Housing Opportunity Fund to support affordable housing rehab, development, and rent subsidies.

Pittsburgh’s public radio station WESA-FM reports on a new push by City Council members Ricky Burgess and R. Daniel Lavelle to create a tax on property transfers. The tax will be used to amortize a bond to be issued by the Urban Redevelopment Authority to meet the needs of Pittsburgh’s low- and moderate-income residents. A task force report issued around the time the Housing Opportunity Fund was authorized found that “more than 23,000 Pittsburgh households spend more than half their income on housing amid higher prices and tax burdens. Such families are especially susceptible to foreclosure, eviction and other hardships, according to last year’s council legislation.”

The idea of creating the Housing Opportunity Fund was approved by the city council last December, but the sticking point has been funding. Back in December, when the Fund was authorized, Pittsburgher Brentin Mock wrote, “When it comes to raising revenue, Pittsburgh only has three options: increase its wage tax, millage rates, or realty transfer tax.” This new proposal from Burgess and Lavelle, which uses the real estate transfer tax to pay off a municipal bond, solves the problem of raising enough money to have an impact. According to WESA, “Lavelle said that such a level of up-front funding is necessary to make the program effective. ‘So that you can immediately begin trying to attack and transform neighborhoods and blocks at a time as opposed to one home there, one house there…’”

One attractive feature of the Housing Opportunity Fund is that though the money can only be used to support housing, it may be used on a wide variety of affordability programs, including down payments for first-time homebuyers, rehabilitation assistance for low-income homeowners, rental rehab for affordable housing developers, and short-term rental assistance for tenants.

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Realtors hate the idea. In a story in the Tribune-Review, “Pittsburgh realtors warn tax increase will drive homebuyers to suburbs,” the Realtors Association of Metropolitan Pittsburgh charges that the increased cost of purchasing in Pittsburgh will drive homebuyers to other parts of the county. Lavelle is skeptical of the claim, telling WESA, “40 percent of the current transfer tax revenues come from property sales with a price tag of $1 million or more, while 85 percent are properties with $150,000 or more…those buyers can afford the one percent increase.”

The battle to create and fund the affordable housing effort has been driven in large measure by an active and mobilized citizen base that turned out for hearings and held demonstrations to protest gentrification. Pittsburgh’s Public Source highlights the efforts of these housing warriors in an article entitled “Affordable and safe housing is not Pittsburgh’s reality, residents testify during Downtown rally.” Among earlier victories was the passage of “Source of Income” protections to protect tenants using a housing choice voucher from discrimination.

Like many Rust Belt cities, Pittsburgh is a “hot” rental market, due at least in part to two particular factors. The first is the newfound preference among younger households for urban rental living. The second factor is the return on investment for new rental developments. Unlike the coastal housing markets where high property and development costs are driving up rents, places like Toledo and Columbus are communities where an investor can acquire and develop properties at levels that guarantee a healthy return on investment…even at modest market rents.

The emergence of a Housing Opportunity Fund with a dedicated revenue source gives the city a tool to address these market changes. Because the Housing Opportunity Fund is not locked into a single strategy, it should be nimble enough to shift programs as the rental market matures and Millennials shift to homeownership options.—Spencer Wells

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ABOUT THE AUTHOR
Spencer Wells

Since his retirement in 2013, Spencer Wells volunteers as the Community Manager of the Rental Housing Information Network in Ohio (RHINO) and as financial secretary of Cleveland Lead Advocates for Safe Housing (CLASH). As a community organizer for 45 years, Spencer’s professional work focuses on tenant rights and community development issues. Spencer, Janet and three cats live on 10 acres in rural Western Pennsylvania where Spencer tends a big garden and a small woodlot while Janet audits, blogs, quilts, and photographs.

More about: gentrificationaffordable housingHousinghousing choice vouchersNonprofit NewsPolicy

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